Schwarzenegger told legislators in a letter that for the first time since 1938, California faced a drop in annual income tax collections as the effects of recession took hold in the most populous US state.

"We now face the leanest of times," Schwarzwenegger wrote. "California for the first time since 1938, faces a decline in personal income."

Schwarzenegger said that since lawmakers passed a budget earlier in February that plugged a projected 42-billion-dollar deficit with spending cuts and tax increases, California's financial situation had worsened.

"...the severe economic downturn that California, like the rest of the nation, has been facing has worsened substantially," Schwarzenegger wrote.

"These changes in the state's economic and revenue pictures have caused a significant new budget problem to emerge," he added.

Schwarzenegger said California now faced a budget shortfall of 15.4 billion dollars, almost double a March estimate of 8 billion dollars.

Failure of a series of ballot measures due to be voted on May 19 at a special election would see the deficit increase to 21.3 billion, he added.

"Absent swift action, the state will be facing a very serious cash crisis," Schwarzenegger added.

California has been battered by the recession, which has sent tax revenues nose-diving. The state, global center of high technology and the movie industry, has a 1.8-trillion-dollar economy that generates about 13 percent of US gross domestic product.

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